Note that these settings can also be handled directly in Merchant Center.
Navigate to Account Settings > Merchant Center > Taxes to begin updating your Tax settings for Google:
For new Merchant Center accounts or those without Tax pre-configured, the app will display two unchecked radial boxes:
Configure no nexus for all states (You do not charge Tax for any state whatsoever)
Configure tax and set up nexus (You can configure custom tax rules by state)
If you do not charge taxes for any state simply select the first option.
If you DO charge taxes for any state:
Select the option 'Configure tax and set up nexus'
Select State from the drop-down menu
Choose Destination Based if you wish to have Google calculate your tax for you OR
Select Manual to configure your know static tax rate in percent
Check the Box for 'Tax on shipping' if you apply taxes to your shipping costs